Informing the discussion around oil sands

June 19, 2013

Oil sands: Will growth continue?

While
challenges persist, it has been a relatively smooth ride for oil sands producers
over the last few years. Some people are beginning to wonder if this
particular resource development play might be slowing, or worse, headed for steep
decline.

Photo Credit: iStockPhoto

Observers have suggested that the oil sands’ development growth may be over, noting
that some companies have been unable to sell oil sands assets, including
everything from leases to stakes in operating projects. Do these unsuccessful
sales really signal a change in the pace of oil sands growth?

Production forecasts

Recent
forecasts suggest development will continue for years to come, with production
ramping up significantly.

And
the Canadian Association of Petroleum Producers, in its crude oil forecast, predicts oil sands production will hit 5.2
billion million barrels per day by 2030, with Canadian crude oil production expected to
be 6.7 million barrels per day by the same year (up from 3.2 million barrels
per day in 2012).

These
production increases will likely be driven by new oil sands projects. Even a
quick look at an Alberta government oil sands project map reveals an immense volume of activity in the
future. There
are 17 oil sands projects under construction, 10 more approved and an
additional 28 more in the application stage.

Steady growth

Like
other extraction businesses, oil sands development has never been a slow, predictable
growth story, and it does present unique challenges perceived as too risky for
some. Would-be developers contend with tight crude oil transportation capacity,
resurging conventional crude oil production, an uncertain regulatory climate,
environment challenges, labour shortages and an unpredictable global economy.
Then again, these are exactly the kinds of risks that current operators are managing
with new technology, strong environmental practices and unprecedented levels
of industry collaboration.

And
even if the pace of oil sands expansion is indeed slowing, steadier growth which
doesn’t feature sizable swings could be a blessing in disguise. As was observed
a few years ago, boom times can lead to unintended consequences, especially for
communities in the oil sands region.

Energy, economic contribution needed

We
expect the oil sands industry will likely continue to attract investment
capital needed for development of this valuable resource. And that’s a good
thing. After all, the world needs energy and bitumen is a viable, proven energy
source. Energy demand is slated to rise
significantly over the next few decades, driven primarily by emerging economies
like China. In a world whose population will have risen as high as nine billion
by 2050, many are looking to raise their standard of life through affordable
sources of energy, like crude oil.

While continued growth in oil sands bodes well for the
long-term global energy situation, further expansion at any pace will
contribute to keeping the Canadian and North America economies on positive
trajectories.

Comments

While
challenges persist, it has been a relatively smooth ride for oil sands producers
over the last few years. Some people are beginning to wonder if this
particular resource development play might be slowing, or worse, headed for steep
decline.

Oil Sands Question and Response (OSQAR) is a blog created by Suncor Energy to support constructive dialogue about the oil sands. In our weekly posts, we talk about the energy industry, environmental impact, tailings management and reclamation, water management and the social and economic implications of oil sands development.

Our oil sands operations are near Fort McMurray, Alberta, where we recover bitumen from oil sands through mining and in situ operations. The bitumen from both operations is then upgraded to refinery-ready feedstock and diesel fuel. More about the where and the what of the oil sands can be found on our oil sands resource page.